No. of Recommendations: 2
Debt consolidation is a typical reason people consider borrowing from a 401K. The idea being that the money borrowed from the 401K is immediately used for the purpose of paying off or down nasty debt. As Wendy concluded it probably depends on the circumstances, but I agree with you Metrochick that to borrow from a 401K because of cash flow problems is pretty drastic if not daft. Even if paying off or consolidating expensive debt is the motivation for borrowing from a 401K, its considered a last resort behind other options. Here's a link to a summary that may help anyone contemplating such http://www.debtconsolidationloanscompanies.com/debt-and-cons...
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